KAIN Publishes Malaysia’s First Comprehensive AI Year-in-Review Report for 2025

KAIN publishes the KAIN Malaysia AI Report 2025, the country’s first comprehensive AI year-in-review. The report shows Malaysia attracting US$759 million in private AI investment, securing 32% of Southeast Asia’s AI funding, and positioning itself among the world’s top 20 AI economies by 2030. It documents progress in infrastructure, domestic LLMs, talent development, policy alignment, and national AI strategy.

KAIN (Konsortium AI Negara) releases the KAIN Malaysia AI Report 2025, the most extensive independent review of Malaysia’s artificial intelligence ecosystem to date. The report presents a full-year analysis of how Malaysia’s AI sector evolves from fragmented innovation into a coordinated national ecosystem supported by policy reform, infrastructure investment, education reform, and industry adoption.

The publication arrives at a pivotal moment for the country. Throughout 2025, Malaysia moves decisively beyond early experimentation and establishes the foundations of a long-term AI economy. The report positions Malaysia on a credible trajectory toward becoming an AI creator nation by 2030, shifting from technology consumption to technology production.

A Year of Accelerated AI Growth and Economic Impact

The report records significant growth in both public and private sector participation in AI. Between the second half of 2024 and the first half of 2025, Malaysia attracts US$759 million in private AI investment, representing 32% of all AI funding across Southeast Asia. This level of concentration places Malaysia at the centre of the region’s AI expansion.

By 2030, AI is projected to contribute more than RM60 billion to Malaysia’s gross domestic product. Based on current momentum, Malaysia is positioned among the Top 20 AI economies globally by 2030. These projections reflect the convergence of infrastructure development, talent creation, domestic intellectual property growth, and national policy alignment.

The report concludes that Malaysia’s AI economy in 2025 is no longer speculative. It becomes operational, measurable, and systemically embedded across government, industry, education, and entrepreneurship.

The Expanding Architecture of Malaysia’s AI Ecosystem

One of the central features of the report is the KAIN AI Ecosystem Map v3, updated on 25 December 2025. This national mapping exercise documents hundreds of organisations actively operating across Malaysia’s AI value chain, including:

• AI platforms and application developers
• Cloud service and infrastructure providers
• Data centre operators and compute facilities
• Universities and public research institutions
• Government agencies, accelerators, and startup programmes

The ecosystem map illustrates how Malaysia’s AI supply chain evolves from isolated clusters into an interconnected national system. The density and diversity of participants indicate rising maturity, stronger collaboration, and increasing commercial readiness.

Domestic Large Language Models Anchor AI Sovereignty

A defining characteristic of Malaysia’s AI strategy in 2025 is the development of domestic large language models. These initiatives represent a strategic move toward AI sovereignty and intellectual property ownership.

Four major domestic LLM programmes lead this effort:

• ILMU, developed by YTL AI Labs, focuses on multilingual processing and cultural fluency across Malaysian and regional contexts.
• MaLLaM, built by Mesolitica, prioritises Bahasa Malaysia and regional language understanding, strengthening local NLP capability.
• Merdeka LLM, produced by Agmo, concentrates on enterprise use cases and sector-specific AI deployment.
• Zetrix – NurAI, developed by Zetrix, aligns ethical AI development with Islamic values and regional compliance standards.

Infrastructure Investment Creates Regional AI Compute Leadership

Malaysia’s AI infrastructure undergoes rapid expansion during 2025, positioning the country as a regional compute hub for ASEAN.

GPU-as-a-Service becomes widely available through major providers, including SNS Network, Telekom Malaysia, Maxis, IP ServerOne, TeamCloud, and Systech & Microlink. SNS Network launches Malaysia’s first NVIDIA H100 AI Factory, significantly expanding national high-performance compute capacity.

At the same time, global cloud and data centre providers strengthen their presence in Malaysia. AI-ready data centres now operate under AWS, Google, Microsoft, BytePlus, Alibaba Cloud, Oracle, YTL, and Telekom Malaysia.

These investments support hyperscale computing, sovereign data hosting, and enterprise AI workloads, creating long-term infrastructure stability for AI growth.

Physical AI and Robotics Extend AI into the Real Economy

Beyond software, Malaysia’s AI development increasingly extends into physical systems. The physical AI ecosystem expands across autonomous systems, industrial robotics, advanced manufacturing, embodied manipulation, and early humanoid research.

Key contributors include Universiti Teknologi Malaysia (UTM), CAIRO Lab, AlphaSwift, DF Automation, Devol Robotics, and Robopreneur APM. 

Their work supports AI adoption in sectors such as logistics, manufacturing, agriculture, smart mobility, and industrial automation, embedding AI directly into Malaysia’s productive economy.

Building a National AI Talent Pipeline

The report documents the creation of a full national AI talent pipeline covering education, higher learning, and workforce development.

AI integration begins at the primary school level, with national curriculum reforms embedding AI education by 2027. Universities including UTM, UM, USM, UPM, Monash Malaysia, MMU, and Taylor’s deliver advanced research programmes, technical training, and industry collaboration.

Workforce development expands rapidly through MyMahir, offering more than 800 skills and 60 AI-related job roles. 

Government initiatives train 445,000 civil servants through AI At Work 2.0. Public engagement programmes such as AI Untuk Rakyat achieve one million completions in six months, indicating broad public participation in AI literacy. Budget 2026 introduces a 50% tax incentive for AI and cybersecurity training, accelerating private sector upskilling.

Funding Mechanisms and Startup Growth

Malaysia establishes structured national support for AI commercialisation through a coordinated set of funding programmes, including the MADANI Digital Grant, MDEC MDAG AI Grant, Cradle Grant, and the MyStartup platform. These mechanisms provide unified access to capital, accelerator programmes, and scale-up support for AI startups and technology ventures.

The integrated funding framework lowers entry barriers for innovation while accelerating commercial adoption across industries.

Policy Alignment and Strategic Governance

The creation of the National AI Office (NAIO) formalises central governance of AI strategy, regulation, ethics, and national planning. Malaysia’s AI Technology Action Plan 2026–2030, AI Nation 2030 agenda, and alignment with Budget 2026 and RMK13 embed AI as a structural pillar of national development policy. The report also highlights Malaysia’s growing leadership role in shaping AI direction within the ASEAN region.

Malaysia’s innovation momentum accelerates through record-setting national programmes:

• Great Malaysia AI Hackathon 2025 – Recognised by ASEAN and ASIA Records, attracting 5,741 participants and awarding RM700,000 in prizes.
• Cursor x Anthropic Hackathon Malaysia – 24-hour innovation marathon producing over 140 projects.
• Alibaba Cloud Malaysia AI Hackathon 2025 – First national hackathon hosted by Alibaba Cloud in Malaysia.

From AI Consumer to AI Creator by 2030

The long-term objective presented in the report is explicit:

Malaysia seeks to transform from an AI consumer economy into an AI creator economy by 2030. This transformation rests on domestic LLM ownership, sovereign compute and data infrastructure, AI talent self-sufficiency, and regional leadership in AI standards and governance.

The KAIN Malaysia AI Report 2025 is produced as an independent, community-driven effort with no business sponsorship. It compiles publicly available information, ecosystem contributions, and verified sources across Malaysia’s AI landscape.